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Baghdad on Sunday evening accused Kurdish forces of making a "declaration of war" after claiming PKK fighters were among Kurdish forces in a standoff with its army in the disputed oil province of Kirkuk.

The National Security Council, headed by Iraqi Prime Minister Haider al-Abadi, said it viewed as a "dangerous escalation" and a "declaration of war" the presence of "fighters not belonging to the regular security forces in Kirkuk" including fighters from Turkey's outlawed Kurdistan Workers' Party (PKK).

"The central government and regular forces will carry out their duty of defending the Iraqi people in all its components including the Kurds, and of defending Iraq's sovereignty and unity," it added.

The PKK have manned several positions around Kirkuk since 2014.

On Sunday, Kurdish Peshmerga fighters rejected a warning from an Iraqi paramilitary force to withdraw from a strategic junction south of Kirkuk, which controls the access to some of the region's main oilfields, a Kurdish security official said.

Last week, Peshmerga forces rushed reinforcements to the oil-rich city in response to reports that Iraqi Security Forces and Shi’a Popular Mobilisation Forces (PMF) were preparing an attack.

If the PMF attacks the Kurds, “it won’t be good for them,” said Peshmerga commander Kemal Kirkuki .

Mr Abadi's comments on Sunday came after Iraqi Kurdish leaders refused to repudiate the results of a disputed referendum on independence as tensions over the Kurdish controlled city of Kirkuk.

Fuad Masum, the Iraqi President, met Kurdish leaders in the resort town of Dukan on Sunday in an attempt to cool rising temperatures over the territory.

Leaders of the ruling Kurdistan Democratic Party and rival Patriotic Union of Kurdistan presented a united front on Sunday, according to advisor to Kurdish President Masoud Barzani, Hemin Hawrami who tweeted: “Good news on reiterating our national unity in the face of all pressure.”

Tensions are high since the federal government demanded Kurds withdraw to pre-2014 positions around Kirkuk and turn over control of oil fields upon which the Kurdistan Regional Government (KRG) has come to rely.

The demands came in response to a disputed referendum on independence that the KRG held last month in both Kurdish regions and adjoining disputed territories controlled by the Kurds.

The Kurds have controlled Kirkuk since 2014 when federal forces fled ahead of an Islamic State advance across northern Iraq. Kurdish leaders say they are prepared to defend it.

“We are ready [for] unconditional dialogue, but ready to counter any aggression,” Mr Hawrami wrote on Twitter on Sunday. Mr Abadi had repeatedly denied that any military operation is planned, but inflammatory rhetoric on local and social media has added pressure to the situation since the referendum.

Isolated clashes have been reported between Peshmerga and PMF in Tuz Khurmatu, 75 kilometres south of Kirkuk.

The Iraqi Kurdish opposition party Gorran, which was not invited to Sunday’s talks, warned that the situation in Kirkuk remained fraught.

“Tonight at 12 o’clock if they don’t reach an agreement between Peshmerga and the Hashed (PMF) it will be very disastrous,” said Mohammad Tofiq Rahim, Gorran’s director of external relations.

Mr Rahim and other Kurdish leaders say the PMF issued an ultimatum or Kurds to withdraw from a strategic position south of Kirkuk.

US Secretary of Defense Jim Mattis has urged Kurds and Iraqi forces to “tone everything down”. “We don't want this to go to a shooting situation,” Mattis told reporters while en route to Washington on Friday.

Iran meanwhile dispatched Islamic Revolutionary Guard Corps commander Major General Qassem Soleimani to the Kurdistan Region on Saturday for talks.

Iraqi forces gather in the area of Taza Khurmata on the southern outskirts of KirkukCredit:
AFP PHOTO / AHMAD AL-RUBAYEAHMAD AL-RUBAYE/AFP/Getty Images

Since the referendum held on September 25, the federal government has closed Kurdish airspace to international flights. Turkey has threatened to close its land border with Iraqi Kurdistan and shut off the oil pipeline upon which the KRG is dependent for revenue.

Iran on Sunday shut its border crossings with Iraq's Kurdistan in support of measures taken by the Iraqi government to isolate the Kurdish region, according to the Iraqi foreign ministry.

However, the same day the Iranian Foreign Ministry Spokesman indirectly dismissed reports that the crossings were shut.

Khogir Mohamed, a Kurdish analyst with the Middle East Research Institute in Erbil criticised Mt Abadi's statement.

"The PKK previously participated in the fight against IS across the disputed territories. This is known to anyone who has been following the evolution of the events since 2014," he told The Telegraph.

"To single this issue out and call it a declaration of war does not help in ameliorating the tension, which is badly needed now. It sends a wrong signal to the Kurds who could say that Mr Abadi is not really for de-escalation. He should focus on finding reconciliatory means."